A Pennant Pattern is a Symmetrical
Triangle at the end of a Flagpole as can be seen here
in red. The Pennant is a ‘continuation pattern’
and downside pennants usually occur in the late phases
of a bear market. The two blue lines are 2/3 and 3/4
of the way into the symmetrical triangle and theory
says that your most reliable breakouts or breakdowns
of this triangle occur inside this range. Technical
Analysis theory also states that when a stock or index
trades all the way out to the triangles Apex, the
trading action after that will be sideways.
This Triangle
traded out to its Apex indicating that the Dow most
likely has established a lower sideways trading range
and it is possible that it will retest it lows. The
300+ downside move we had on Friday, February 29,
pulled us back approximately to the Apex level and
a move and close lower is another indicator that we
should retest the lows.
Measuring the
Flagpole indicates that should the market break to
new lows, and using the flagpole to measure the move
to the downside, the target on the Dow is down to
around the 11,000 level.
To learn more about Down Side Pennants
see Stock Trading Cards T19 and T20 and watch Lecture
4. Visit www.StockTradingCards.com
~Robert Perrego
Disclosure –
no positions directly related to the Dow Jones Industrial
Index
3/2/2008 6:00
PM
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